accounting for interim reports
airlines suffered declines as well. Recently, some airline stocks have recovered to pre-September 11 levels, but several, like US Airways, are still significantly lower than before.
Airline industry before 9/11
The airline industry's disordered state is not just a result of the September 11 attacks, but also the termination of a quarter century of deregulation. Advocates had touted the 1978 Airline Deregulation Act as a way to increase competition and bring down ticket prices. Indeed, deregulation initially enabled upstart carriers to get in the air and made flying affordable for many people who had never flown before. Since deregulation, service to smaller less profitable cities has suffered and pricing has become a crazy quilt of discriminatory arrangements. Travel to and from many airports has become monopolized by one or a few airlines. Nonetheless, airlines operate on very tight profit margins compared to other industries. As airline bottom lines have been squeezed, so has the margin of safety.
Consolidation or death became the choices for many carriers. The competitive carnage destroyed once-great airline such as Pan Am, and saw many others gobbled up. USAir bought PSA and Piedmont. Delta swallowed up Western and the remains of Pan Am, while Northwest took over Republic. More recently, American Airlines absorbed the TWA. Not only did these mergers lead to route disruptions, but they also destroyed thousands of jobs, as overlapping sections of newly merged companies created "redundancies." The mergers also created challenges for union workforces how to integrate seniority lists, for example. Conflicts over seniority in the American-TWA merger will likely sow internal union conflicts for years to come.
September 11 and airline industry
The global aviation industry may have shed as many as 400,000 jobs in the aftermath of the September 11 attacks on the United States, according to study by the International Labor Organization. Passenger numbers have fallen since the 11 September attacks, leading to route cuts and widespread layoffs, but airlines may be using the tragedy as an opportunity to push through cutbacks. Job losses in the United States include, NWA 8,871, American 20,000, Continental 12,000, Delta 13,000, United 20,000 and US Airways 11,000.
In North America, airlines immediately announced drastic job cuts and then embarked on often difficult negotiations as trade unions sought to reduce the scale and mitigate the impact of the job losses. Almost all American carriers cut at least 20% of their staff, with United Airlines and American Airlines both cutting 20,000 jobs, the report found. In North America, US Airways went for the heaviest cuts relative to the size of its workforce. Its 11,000 layoffs amounted to 23% of its workforce.
The Response of the Airline Industry
To respond to the crisis, the airline industry has taken several cost cutting measures. Capacity is matched more closely with decreasing customer demand by removing aircraft from the airline fleet and reducing the aircraft utilization.
Before June 30, 2001, the airline fleet has increased by 69 units. However after 9/11 the situation has been [next page]